Like so much about politics today, the debate around Uber and Lyft’s Proposition 22 in California has quickly become polarized. Advocates on both sides have engaged in simplistic arguments of Silicon Valley versus labor unions, or drivers really want flexibility instead of security.
Yes, the future of work is changing, and the labor laws must adapt, as the CEOs of Uber and Lyft asserted recently in a joint op-ed. Yet these companies have consistently missed numerous opportunities to act as good-faith partners for their drivers, and for society in general.
I have personally witnessed these companies’ failings. After my book Raw Deal: How the Uber Economy and Runaway Capitalism Are Screwing American Workers was published, I was asked to a meeting with high level Uber representatives. Previously I also had been part of a meeting with Lyft leaders. A central part of these discussions was my proposal calling for a “portable safety net” for their drivers, and for other types of freelance workers.
With a portable safety net, each worker would have an Individual Security Account into which any business that hires that worker would contribute an amount pro-rated to the number of hours worked for that business. Those funds then would be used by that worker to pay for her or his safety net needs, such as healthcare, Social Security, sick leave, injured worker and unemployment compensation. Instead of pitting flexibility against security, a portable safety net would allow not only flexible work, but also the economic security that workers and their families need.
A number of countries already do something like this, and President Barack Obama endorsed my idea in his 2016 State of the Union address. A statement of principles was signed by forty business, government, labor and NGO leaders – including the president and CEO of Lyft, John Zimmer and Logan Green – calling for a portable safety net as a foundation for the future of work in the 21st century economy. Uber CEO Dara Khosrowshahi also has called for enacting a portable safety net plan.
It seemed like this had the makings of a win-win solution. But when legislative bills were introduced for a portable safety net in the states of Washington, New York and New Jersey, these business leaders came to the bargaining table offering pocket change. Rather than contributing 20% of a worker’s wage that is necessary to fund an adequate safety net, Uber and Lyft offered to contribute 2.5%. And they wanted their contributions to be voluntary. In all three states the legislation died because these billion-dollar companies frittered away real opportunities.
When California legislation was proposed, Uber and Lyft once again countered with a paltry portable benefits package. With no serious negotiating partner on the other side, the California legislature overwhelmingly passed AB 5 to reclassify drivers as employees rather than independent contractors. Now it’s the law, but Uber and Lyft have refused to implement it. This has resulted in multiple lawsuits and legal judgments against these companies.
Now Uber and Lyft are on the ropes, having lost billions of dollars every year, even as their stock prices have collapsed. But one can’t help but wonder how it could have been different if they had come to the bargaining table with a serious offer. Instead these desperate companies have spent $190 million – the highest amount for a ballot proposition in California history – to try and pass Proposition 22 and return their drivers to the indentured servitude of independent contractor status.
So what are these companies offering with Proposition 22? Not having learned their lesson, again they are offering a miserly version of a portable safety net that will perpetuate the second-class status of its large taxi driver workforce. For example, the value of Proposition 22’s offered health benefit is about $1.20 an hour, well below the value of benefits mandated for employees under state and federal laws (which is more like $4 to $6 per hour, depending on the occupation). Many drivers would not be able to afford their share of the health care premiums, which would range from 20 to 60% of the premiums.
Prop 22 also will not likely result in higher wages because of a complex formula that will be used to determine “minimum wage.” If you read the fine print, only “engaged hours” will be counted, meaning when they have a passenger in the car. All the hours of downtime. waiting for the next fare, or disinfecting cars between rides, or driving back from a remote drop-off location, will not be counted as hours worked when calculating the minimum wage. A study by the University of California-Berkeley’s Labor Center found that, if Proposition 22 passes, many drivers could earn as little as $5.64 an hour once their considerable driving expe
None of Prop 22’s offerings come close to what drivers will receive if voters reject it and drivers are allowed to remain regular employees instead of independent contractors. As employees, drivers would have the option of organizing a labor union and negotiating a contract locking in wages, benefits and working conditions; as independent contractors, federal law forbids union formation or collective bargaining. Even worse, Proposition 22 would make it impossible to change its prescribed working conditions, since it will require a ridiculously high 7/8 of a vote by the state legislature to modify it.
Not only has ride hailing been bad for most drivers, but a number of studies have found that, because Uber and Lyft have flooded the streets with their taxis, ride hailing has resulted in a dramatic rise in traffic congestion, carbon emissions and a reduction in the use of public transit.
Uber and Lyft are their own worst enemies. One can’t help but wonder why these multibillion dollar companies consistently come to the bargaining table offering pocket change. They entered the taxi business 10 years ago, breaking every law in the books, motivated by the Silicon Valley philosophy of “move fast and break things.” Well they broke it, and now they can’t figure out how to fix it.
As California Attorney General Xavier Becerra has said, “Any business model that relies on short-changing workers in order to make it probably shouldn’t be anywhere, whether California or otherwise.” Ride-hailing has been popular and seemingly has potential, but urban dwellers need to insist that these companies not seek to profit by shifting all the risk onto their workers and hurting the environment. The vote over Prop 22 is about making a stand for the type of jobs and businesses Californians want in the Golden State.